Virginia looks to boost Medicaid reimbursement to attract more doctors

BY MICHAEL MARTZ, RICHMOND TIMES-DISPATCH, November 26, 2018.

With Virginia’s Medicaid program poised to expand coverage for hundreds of thousands of people, the state is considering a proposal to increase reimbursement rates for doctors to encourage them to provide care to more patients under the program.

The Department of Medical Assistance Services has asked Gov. Ralph Northam to include $19.1 million in his proposals next month for the two-year budget to boost Medicaid reimbursements for primary care doctors and reduce the gap with the federal Medicare program for the elderly.

The proposal, limited to the second year of the budget, is part of an emerging state plan to attract more doctors who are willing to participate in Medicaid, a shared state and federal health care program for poor, elderly and disabled Virginians.

With Medicaid expansion set to begin Jan. 1, “the experience of accessing care could still be a challenge across the commonwealth,” Dr. Jennifer Lee, director of the state Medicaid office, told a joint legislative subcommittee on Monday.

State legislators are concerned about the widening gap between state reimbursement rates to doctors in Medicaid and those in Medicare, but they want more information about the potential costs of closing the gap before they convene in January for a 45-day session that will include revisions to the two-year budget adopted this year.

“We need to know sooner than later,” said House Appropriations Chairman Chris Jones, R-Suffolk, who also chairs the Joint Legislative Subcommittee for Health and Human Resources Oversight. “We can’t hit what we can’t see.”

Widening gap

DMAS, as the state Medicaid office is known, says the gap between state reimbursements to doctors in Medicaid and Medicare has widened in the past eight years, especially for preventive pediatric services.

In the 2010-2011 fiscal year, Medicaid reimbursed doctors for those services at 94 percent of the rates paid for Medicare. Lee said the reimbursement has fallen to 71 percent of the rates paid for Medicare in the current fiscal year — a drop of 23 percentage points.

Similarly, reimbursement for other pediatric services has dropped from 83 percent of the Medicare rate eight years ago to 75 percent. The fall has been slightly less for reimbursement of adult preventive and primary care services, which went from 73 percent to 66 percent over the same period.

While the problem isn’t new, the urgency is greater because the state expects to enroll 360,000 people under expanded Medicaid eligibility in the first year, 375,000 by the end of the biennium in mid-2020 and ultimately 400,000 people.

“The combination of declining rates relative to other payers, significant limitations in primary care access throughout the state, and the increased demand for primary care services following Medicaid expansion to an additional 400,000 Virginians creates a pressing need to bring Medicaid rates closer to parity with the market,” DMAS states in its funding request to the governor’s budget office.

Northam isn’t saying what he’ll recommend until he submits his budget proposal to the General Assembly money committees on Dec. 18, but spokeswoman Ofirah Yheskel said, “As a provider, the governor is uniquely interested in discussions on health care in Virginia.” Northam is a former Army doctor and is a pediatric neurologist by occupation.

Estimated cost

In its budget request, the agency estimates that raising physician rates to 80 percent of what the state pays Medicare would cost about $40 million for the existing Medicaid population, with the expense split almost evenly between the state general fund and the federal government.

For the expansion population, the cost would be almost $25 million, with almost all of it borne by the federal government under the Affordable Care Act and the state’s share covered by a new provider assessment on hospital revenues.

Separately, DMAS responded to a legislative request about bringing reimbursement to 75 percent of the Medicare rate for the four specialty areas with the lowest rates. They are: pediatric, already at 74.9 percent; emergency room, at 69.8 percent; adult preventive and primary care at almost 66.8 percent; and anesthesia at 66.4 percent.

Underserved areas

Currently, Medicaid officials say access to care is inconsistent under the program. Parts of the state are left with less than two-thirds of their primary care needs served, primarily in rural Virginia, including the Eastern Shore and Northern Neck.

Lee said her agency estimates that 63 percent of physicians participate in Medicaid and 71 percent of those are taking new patients, but DMAS hopes to get a better understanding through a survey it is conducting with Virginia Commonwealth University.

The partners have sent the survey to all primary care physicians in the state “to assess capacity and willingness to care for [the] Medicaid expansion population.” A second survey has been sent to providers who had not responded to the first questionnaire.

The state also is working with free clinics, including CrossOver Healthcare Ministry in Richmond, and federally qualified health centers to expand their capacity to care for Medicaid patients.

But DMAS is relying most heavily on the six health insurance plans that will oversee 95 percent of the services delivered by the expanded program under managed care organizations.

Lee said an outside consultant, Health Services Advisory Group, confirmed independently that the six plans have adequate health care networks to serve the expanded population.

The private health plans say they are ready, but they acknowledge the limits of what they know about the people they will serve.

“The basic challenge is who’s going to seek care, where and when, and for what reason,” Doug Gray, executive director of the Virginia Association of Health Plans, said Monday.